Data Shows Consumer Inflation Continues to Slow Down
The annual consumer inflation has slowed down in May, while the growth in bank lending also fell below its expectation. This data have piled more evidence showing the country’s economy might have slowed further in the latest quarter. The National Bureau of Statistics said that the consumer inflation slowed 2.1 percent which is said to be the lowest in three months and producer prices fell 2.9 percent compared to a year earlier.
The data is slowing that the economic growth in China continues to slow down. The second quarter growth is probably the slowest compared to the first quarter which shows a weak demand. Furthermore the evidence of a separate slowdown was presented by a central bank data saying that Chinese banks lent more than 600 billion yuan in new local currency loans in May which missing market expectation of 850 billion yuan and lower that 792 billion yuan in April.
The subdue inflation enables China rp track an easy monetary stance and hopes to see a possibility of banks to cut rates later on this year to further reduce financing costs for any struggling Chinese firms and hopes that housing inflations will not flare up. Financing costs of companies is high and the central bank must pursue liberalization of interest rates furthermore the China fiscal policy needs to protect consumption growth and support investment.